- market cap
- random layoffs
- overstaffing
- falling competence
A lot of frictions build in there. I'm curious how it will play out.
I tend to translate market cap for big companies into dollars per person. 8 billion people in the world, so Google expects $250 profit per human being in average to be accurately valued.
That feels high, but what do I know?
I don't think your calculation makes sense. You ignored the earnings multiple. Companies are valued at a multiple of yearly earnings. A reasonable multiple is 20, so divide 2 trillion by 20 first, then by 8 billion, and that's $12.50 per person per year. Their current revenues are already over $9 per person per year!
Now consider that in addition to search Google owns the single most widely used consumer operating system and web browser, the largest video site, a growing cloud business, the only alternative to Nvidia silicon for AI that's been deployed at scale, and other stuff like Waymo that has the potential to be enormous (it seems like a winner take all market to me, where the winner essentially owns all ground transportation, and Waymo is in the lead by far), plus still the largest AI research program in the world (even if it has had trouble turning that into products so far).
People in this thread are also confusing revenue, gross income, and net income.
People in this thread are also giving other companies, but those may be overvalued as well. Companies have a finite (if long) lifespan. If market cap is more than total discounted future income, it's overvalued. If it's less, it's undervalued. It's just a question of when the market corrects.
Of course it's also possible that growth stalls next year, the stock tanks and the company goes under in short order. If you believe that then short the stock, you stand to make a fortune.
Microsoft is 35.
I may be ahead of 7.6-7.8 billion people in terms of the total lifetime amount I'll end up funding Google's funnel, but of the portion that spends more than me there's room to spend a lot more (and you're forgetting about people who haven't been born yet who will also be paying money to google one day)
Market cap isn't really an estimation on how much money the company might make anyway, since Google doesn't pay it's shareholders dividends. It's just a way for people to speculate on how much a thing will be worth in the future.
In theory there should be some relationship with current profits, but... did you take a look at Tesla any time in the last couple of years?
Google just started paying a dividend.
Also, at that size you’re basically like a government service. Companies like this should be held to standards as if they were publicly owned utilities, on topics like pricing or transparency or free speech or whatever.
Why was it so easy for Duckduckgo to establish itself?
Was was Brave able to take a bit from Chrome, even when Microsoft Edge failed?
Google faces strong competition. Even on its core revenue stream, advertising, Facebook was able to beat it.
The Google tax is still going after profits: https://www.investopedia.com/terms/g/google-tax.asp
This merely encourages more creativity in accounting.
Google's ad business while printing cash is very brittle. Consumer taste can change any day and can cause Google to suddenly look at some big percentage drop. Ad is still the only moneymaker of the company. All the products you listed above are not making money, most money comes via search ads (which Android surely helps to), and that can go the way of Altavista due to several reasons (people moving to chatbots, iOS changing default or allowing new engines, regulators forcing chrome/android to randomize default).
So we should be focusing on what that debt is being used to fund, more than the debt itself. In my opinion at least.
Overall I agree though, the debt is massive and isn't actually being used to better anything within the USA.
Then we have the ginormous index funds who buy when buys are happening.
We just collectively decided that the best thing for society is if everyone just buys stocks for their savings. Either directly or through pension funds. And now we're pretty much stuck with that.
[1] https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(no...
Australia GDP: 1.7T
Google annual revenue: 0.3T
Australia effectively creates an entire Google every single year.
This is the perpetual problem with scammy advertising - the ad network would lose money if they controlled it, so they don’t try very hard.
Even inline ads and submarine / subliminal advertising can be detected and excised.
Ok so there has never been a dividend payment so far, so all the money investors get out from Google is from new investors that get in?
Is that even allowed?
Edit: but it’s so apt. What that valuation is actually showing you is the value of sitting in between people looking for things and people looking to sell things to people looking for things, and turning that position into an ads engine increasingly at the expense of enabling people to find what they are looking for. The valuation goes up to the extent ads are prioritized over just getting out of the way and giving people what they are looking for.
Google Earning Q1 2024 [pdf]
Trading the core of the business (or whatever is left of it - ie, "do no evil") in exchange for short term gains.
Maybe we will see more "Project Nimbus" initiatives. Maybe a collaboration with North Korean, or Russian governments. Maybe this time they will sell out for $10B+ or more.
